The Global Marketplace 15

15-2 Global Marketing in the 21 st Century The world is shrinking rapidly with the advent of faster communication, transportation, and financial flows. The world is shrinking rapidly with the advent of faster communication, transportation, and financial flows. International trade is booming and accounts for 25% of U.S. GDP. International trade is booming and accounts for 25% of U.S. GDP. Between 1996 and 2006, U.S. exports are expected to increase 51%. Between 1996 and 2006, U.S. exports are expected to increase 51%. Global competition is intensifying. Global competition is intensifying. Higher risks with globalization. Higher risks with globalization.

15-3 Global Marketing into the Twenty-First Century To compete, many U.S. companies are continuously improving their products, expanding into foreign markets, and becoming global firms. To compete, many U.S. companies are continuously improving their products, expanding into foreign markets, and becoming global firms. Global firms face several major problems: Global firms face several major problems: –High debt, inflation, and unemployment have resulted in highly unstable governments & currencies, –Governments placing more regulations on foreign firms, –

15-4 Major International Marketing Decisions

15-5 Looking at the Global Marketing Environment The International Trade System: Restrictions—tariffs, quotas, embargos, exchange controls, and non-tariff trade barriers. Helps Trade—reduces tariffs and other international trade barriers. Regional Free Trade Zones: Groups of nations organized to work toward common goals in the regulation of international trade.

15-6 Industrial Structure Shapes a country’s product and service needs, income levels, and employment levels. Shapes a country’s product and service needs, income levels, and employment levels. Subsistence Economies Raw Material Exporting Economies Industrializing Economies Industrial Economies

15-7 Political-Legal Environment Attitudes Toward International Buying Government Bureaucracy Monetary Regulations

15-8 Cultural Environment How Customers Think About and Use Products Cultural Traditions, Preferences, and Behaviors Sellers Must Examine the Following Before Planning a Marketing Program Within a Given Country.

15-9 Deciding Whether to Go Global Reasons to consider going global: Reasons to consider going global: –Foreign attacks on domestic markets –Foreign markets with higher profit opportunities –Stagnant or shrinking domestic markets –Need larger customer base to achieve economies of scale –Follow customers who are expanding

15-10 Deciding Which Markets to Enter Before going abroad, the company should try to define its international marketing objectives and policies. Before going abroad, the company should try to define its international marketing objectives and policies. What Volume of Foreign Sales is Desired? How Many Countries to Market In? What Types of Countries to Enter? Choose Possible Countries and Rank Based on Market Size, Market Growth, Cost of Doing Business, Competitive Advantage, and Risk Level

15-11 Market Entry Strategies

15-12 Market Entry Strategies Exporting: Exporting: –Indirect: working through independent international marketing intermediaries.

15-13 Market Entry Strategies Joint Venturing: Joint Venturing: –Joining with foreign companies to produce or market products or services. Approaches: Approaches: –Licensing –Contract manufacturing –Management contracting –Joint ownership

15-14 Market Entry Strategies Direct Investment: Direct Investment: –The development of foreign-based assembly or manufacturing facilities. –This approach has both advantages and disadvantages.

15-15 Changes in Product, Advertising, Distribution Channels, & Price Standardized Marketing Mix Selling Largely the Same Products and Using the same Marketing Approaches Worldwide. Adapted Marketing Mix Adjusts the Marketing Mix Elements to Each International Target Market. Deciding on the Global Marketing Program

15-16 Five Global Product and Promotion Strategies

15-17 Global Product Strategies Straight Product Extension: Straight Product Extension: –Marketing a product in a foreign market without any change. Product Adaptation: Product Adaptation: –Adapting a product to meet local conditions or wants in foreign markets. Product Invention: Product Invention: –Creating new products or services for foreign markets.

15-18 Global Promotion Strategies Can use a standardized theme globally, but may have to make adjustments for language or cultural differences. Can use a standardized theme globally, but may have to make adjustments for language or cultural differences. Communication Adaptation: Communication Adaptation: –Fully adapting an advertising message for local markets. Changes may have to be made due to media availability. Changes may have to be made due to media availability.

15-19 Global Pricing Strategies Companies face many problems in setting their international prices. Companies face many problems in setting their international prices. Possible approaches include: Possible approaches include: –Charge a uniform price all around the world. –Charge what consumers in each country will pay. –Use a standard markup of costs everywhere. International prices tend to be higher than domestic prices because of International prices tend to be higher than domestic prices because of Companies may become guilty of _____ –a foreign subsidiary charges less than its costs or less than it charges in its home market. Companies may become guilty of _____ –a foreign subsidiary charges less than its costs or less than it charges in its home market.

15-20 Whole-Channel Concept for International Marketing

Create an International Division 3. Become a Global Organization Degree of Involvement in International Marketing Activities Deciding on the Global Marketing Organization